Partial and Enterprise Budgets for Growing Hard Cider Apples in Virginia

Hard cider is a burgeoning part of the alcoholic beverage industry. To make a premium hard apple cider product, commercial cider-makers desire apple cultivars with high tannin, high acid, and/or high sugar content. Some commercially grown apples, such as ‘Albemarle Pippin’, ‘Winesap’, and ‘Granny Smith’ can serve these purposes. However, many cideries are also seeking specialized apple cultivars with high tannin content or other characteristics that make them unfit for most other market destinations. To help growers outline the major revenues, expenses, and risk associated with producing special apple cultivars, a partial budget for growing multipurpose apples (defined as apple cultivars that potentially have multiple market destinations, e.g. hard cider, fresh market, or processing) and an enterprise budget for planting and growing specialized hard cider apples were developed. Both budgetary decision aids were created using Microsoft Excel^®and are available as a free download that includes a built-in user’s manual. The budget workbooks can be filled in by growers to calculate their production costs and make a well-informed business decision to plant multipurpose and/or hard cider cultivars. By using data collected through surveying commercial apple growers and published apple orchard budgets, assumptions were made about the production costs and returns that allowed the exploration of alternative scenarios for Virginia orchards using sensitivity analyses. These analyses are built into the downloadable Excel worksheets and provide users with a starting point for customizing their own budgets. The partial budget analysis suggests that growers would need to receive a median return of (U.S. dollars) $0.63/kg at a yield of 28,245 kg·ha^-1 to show a net change in profits when growing multipurpose apples instead of mainstream cultivars. Using a $0.79/kg selling price and mature yields of 36,485 kg·ha^-1, our enterprise budget estimated the first year establishment cost at $35,635/ha, with annual variable costs at maturity of $8,080/ha, and total variable costs over 25 years of $215,930/ha. Assuming a discount rate of 12%, which reflects the rate of return a model operation could have earned if it had invested in its next best alternative investment, the cumulative net present value of net income before taxes becomes positive in year 11. Since commercial production of hard cider apple cultivars is limited in the United States, let alone Virginia, our analyses might be limited by unknown production risks and changes in the market structure.